Brokerage BNP Paribas on Friday said that the Reserve Bank of India (RBI) will go in for another 25 basis points (bps) increase in policy rates at its August monetary policy review, a day after official data showed retail inflation having accelerated to a five-month high of 5% in June.
“Consumer price inflation points out to a hike in August,” the French brokerage said in a note, adding it expects the RBI to hike the repo rate by 25 basis points to 6.5%. BNP Paribas said the inflation rate is higher than the RBI’s medium-term target of 4%.
The upside risks to price gains come primarily from a hike in minimum support prices for foodgrain procurement and also the hike in wages, it added.
